With more and more debtors considering bankruptcy today, it is important for them to understand the options and what the consequences of such action may include. First, it is important to realize that there are several types of bankruptcy, identified by their chapter in the Bankruptcy Code. The most common options are chapter 7 and chapter 13. Chapter 7 governs the liquidation of all non-exempt property to pay as much consumer debt as possible before much of the remainder is erased. Chapter 13 outlines a reorganization of the consumer’s debts and provides some protection while they pay those debts at a slower pace.
One of the advantages many people find in chapter 7 bankruptcy is the opportunity to protect a great deal of their personal property by claiming the federal or state exemptions that apply.
Georgia Bankruptcy Exemptions
In Georgia, the state requires all those filing chapter 7 bankruptcy to use the state exemptions only. Those state exemptions include:
- Homestead – up to $10,000 in real property or co-ops used as a residence (doubled if married, whether or not the spouse is filing)
- Any other property – up to $5,000 of unused portion of homestead
- Personal property
- Clothing, household goods, furnishings, books, animals, musical instruments, and crops – up to $300 per item and $5,000 total
- Health aids
- Lost future earnings recoveries needed for support – up to $7,500
- Personal injury recoveries – up to $10,000
- Wrongful death recoveries needed for support
- Burial plot in lieu of homestead
- Any additional property – up to $600
- Wages – private and federal – up to 40 times state or federal hourly minimum wage or a minimum 75% of earned but unpaid earnings – whichever is greater (Judge may authorize more for low-income debtors)
- Pensions
- Tax exempt retirement accounts, Traditional or Roth IRAs – up to $1,095,000 per person
- ERISA-IRAs and qualified benefits
- Nonprofit employees, public employees, other pensions and IRA payments needed for support
- Public Benefits
- Worker’s compensation
- Unemployment compensation, Veteran’s benefits, social security, crime victim’s compensation, and local public assistance
- Old age assistance
- Aid to the blind or disabled
- Tools of the Trade – books, tools, and implements – up to $1,500
- Alimony and child support – that which is needed for support
- Insurance
- Fraternal benefit society benefits
- Life insurance proceeds
- Annuity and endowment contract benefits
- Disability or health benefits – up to $250/month
- Group insurance
- Unmatured life insurance contract; dividends, interest, loan value, or cash value – up to $2,000 if debtor or someone they depend on is beneficiary
- Life insurance proceeds if owned by someone debtor depends on and is required for support
How to Keep a Car
Under chapter 7 bankruptcy, vehicles are exempt up to $3,500 in value. However, if that vehicle secures a loan, the debtor must continue to make payments on a regular basis or the lien holder may repossess.
Stopping Foreclosure
While the Georgia homestead exemption protects up to $10,000 of a homestead, or up to $20,000 for couples, since that property is generally security for a mortgage, the debtor must continue to pay that mortgage to protect their home from foreclosure by the lien holder.
